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Optimism fell to a six-week low as expectations for a flat market rebounded in the latest AAII Sentiment Survey. Pessimism stayed below average for the sixth consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.6 percentage points to 36.8%. This is the lowest level of optimism recorded by our survey since February 6, 2014. It also ends a streak of five consecutive weeks with bullish sentiment above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, rose 5.2 percentage points to 37.1%. This is the 11th consecutive week with neutral sentiment above its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined by 0.7 percentage points to 26.1%. Pessimism is below its historical average of 30.5% for the 24th time in 28 weeks.

The decline in bullish sentiment is not significant, especially when one considers that the level of optimism remains close to its historical average. Weakness in the stock market over the survey period may have moved some investors from the bullish camp and into the neutral camp. Bearish sentiment has not moved much over the past three weeks, fluctuating within a 0.7 percentage point range.

Many AAII members are encouraged by the overall upward momentum of stock prices, earnings growth, economic expansion, the Federal Reserve's tapering of bond purchases and low interest rates. Some AAII members are fretting about elevated stock valuations, the pace of revenue growth, the slow rate of economic expansion and Washington politics.

This week's special question asked AAII members if the Federal Reserve should keep, get rid of or adjust its 6.5% unemployment rate target. Respondents were mixed with 39% voting to get rid of the target, 22% saying it should be adjusted and 21% wanting to keep it unchanged.

Those who wanted to keep the target unchanged thought the economy is not strong enough or worried about a negative market reaction. Those who wanted to adjust it suggested either lowering the target rate or having it encompass other employment measures.

Those who want to get rid of it didn't think the target was contributing to job growth or that the Federal Reserve should be focused on job growth. (Nearly all of the responses were given before the fixed target was rescinded in yesterday's Federal Open Market Committee meeting statement.)

Many AAII members questioned the validity of the unemployment rate as an accurate measure of the health of the job market. This skepticism existed regardless if a respondent thought the target should be kept, adjusted or removed.

Here is a sampling of the responses:

"Keep! The 6.5% rate seems to be working satisfactorily. No boat rocking please."

"Adjust. The target is too high. There will always be many more unemployed than appear in the numbers."